Can Government and Private Industry Get Along?

David Cutler served at Harvard University as an Assistant Professor of Economics from 1991 to 1995, was named John L. Loeb Associate Professor of Social Sciences in 1995, and received tenure in 1997. He is currently the Otto Eckstein Professor of Applied Economics in the department of economics and Kennedy School of Government and recently completed a five-year term as associate dean of the Faculty of Arts and Sciences for Social Sciences.

Professor Cutler served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was senior health care advisor to Barack Obama's Presidential campaign. Professor Cutler also advised the Presidential campaign of Bill Bradley. Among other affiliations, Professor Cutler has held positions with the National Institutes of Health and the National Academy of Sciences. Currently, Professor Cutler is a Research Associate at the National Bureau of Economic Research and a member of the Institute of Medicine.

Professor Cutler is the author of Your Money Or Your Life: Strong Medicine for America's Health Care System, published by Oxford University Press. This book, and Professor Cutler's ideas, were the subject of a feature article in the New York Times Magazine, "The Quality Cure", by Roger Lowenstein. Cutler was recently named one of the 30 people who could have a powerful impact on healthcare by Modern Healthcare magazine and one of the 50 most influential men aged 45 and younger by Details magazine.

20 August, 2009

Question: Will private industry and government be able to collaborate on a healthcare solution?

David Cutler: Two examples where they have: one is the insurance companies have come together and said ‘you know what, we’ll get rid of the practice of under-writing people and denying them coverage when they are sick of not renewing and all of that, if you can make sure that everybody really will buy insurance.’ And second—so that was one example—and second, they came to the president along with other insurance groups in early May and said ‘you know what, we believe through a variety of reforms we can save two trillion dollars over the next decade.” About six hundred billion dollars in the public sector to be used for health care reform. With just huge, huge steps that they’ve taken—maybe they didn’t go far enough, whatever—but huge, huge steps that they’ve taken.

Why is that? I think partly, the insurance companies know that the system can’t go on much longer. Again, going on where we are without change is just not a real viable option. The system is falling apart. Our solution to cost control now, is you throw two million people into the uninsured ranks every year. That just cannot go on.

And the question that all insurance groups that have to face is, do you want to be part of the solution or do you want to be perceived as part of the problem? And every interest group has had to ask themselves that. The President has been very, very open about saying to every group, ‘If you want to be part of the solution, I want to work with you.’ Congress has been very open about saying to the interest groups, ‘If you want to be part of the solution, we will work with you.’

So, the President on the one hand, says ‘Look, I am not going to tolerate a healthcare system where the people get denied coverage because they’re sick.” And on the other hand, he says, to the insurance companies, ‘if you are willing to work with me and talk to me, then I am willing to work with you.’ And he says that openly and very sincerely. And I think is what these groups are saying. They know in their hearts, they know as a business model that they can’t continue and they have a President and a political process that is saying “Come to the table now and let’s all figure out how we can get this done.” And that’s, I think, the dynamic that has taken hold.

Recorded on: July 06, 2009

David Cutler explains the burgeoning friendship between Obama and insurance companies.